As Market Street Mortgage Corp. shuts down, some of its Texas employees have been scooped up by a new joint venture.
The Clearwater, Fla.-based company is pending closure following the Sept. 28 shutdown of its parent NetBank by the Office of Thrift Supervision, according to an announcement Monday.
The company issued advance layoff notices to 182 employees at its, headquarters yesterday, according to a Worker Adjustment and Retraining Notification with the state’s Agency for Workforce Innovation. The job cuts are scheduled to become effective Dec. 4 through Dec. 18.
About 80 Market Street employees facing unemployment in Texas secured new employment through Flagstone Lending Group, a divisional joint venture arrangement between Market Street Regional Vice President Mark Cady and Salt Lake City, Utah-based Primary Residential Mortgage Inc., according to the announcement.
As of Monday, Cady and the other former Market Street members continue to focus on originating loans for the Houston, Dallas, San Antonio, Austin and McAllen markets under the Flagstone platform, while receiving financial and operational support from PRMI, including training, human resources, information technology, marketing, secondary marketing, underwriting/risk management, escrow, and document control, the announcement said.
“Despite the turmoil of the last several days, we’re extremely excited to work in partnership with PRMI,” said Cady, who will head Flagstone, in the written statement. “This arrangement will enable us to hardly skip a beat and move forward serving our customers. We’re confident that Flagstone Lending Group will provide the same exceptional products and services that Market Street customers have come to expect.”
Cady managed approximately 60 Market Street employees, with his region closing an average of approximately $25 million per month in 2006 — about 25 percent of the entire company’s profit that year.
The 182 Florida workers and 80 Texas employees represent about 44 percent of the 600 employees. Market Street told MortgageDaily.com it had throughout 50 offices nationwide at the end of August, around the time it had let go of at least 20 employees.
In an Aug. 6 filing with the Securities and Exchange Commission, NetBank had disclosed it anticipated recording second-quarter impairment charges of $24.6 million on goodwill related to Market Street based on the likelihood of execution of one or more strategic alternatives it was exploring for the retail unit.
NetBank reported it was also expecting a $25 million impairment charge on owned long-lived assets, mostly related to NetBank Funding Services division, the third-party conforming mortgage business it began winding down in May and closed in July.
The OTS closed the $2.5 billion Georgia-based bank because it was unable to sell its business and had no remaining prospects for raising capital and achieving profitability. The regulator noted NetBank “sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies.”
Among the loan programs at 20-year-old Market Street are conventional, FHA, VA, interest-only, jumbo, “less than perfect” credit, and 80/20 combo loans, according to its Web site.
